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Topic 5.1

Scarcity: Resources are limited in supply, e.g. raw materials, time

Trade-off: Where the selection of one choice results in the loss of another.

Opportunity Cost: The loss of the next most desired alternative when choosing a
particular course of action.

Price: The amount of money required to purchase…

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Positive externalities: Those benefits arising from business activity which are
experienced by people outside the firm. The firm receives no payment for the benefits

Profits: the rewards for risk-taking. Profit is the difference between the amount of
revenue earned b a firm and the total costs of producing the…

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Internal shock: An unanticipated change in demand or inflation caused by factors within
the country.

Tax revenue: Money received by the government from people and businesses paying
their taxes.

Exports: Goods and services which are sold to other countries and which lead to
payments to the UK.

Imports: Goods and…

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Economies of scale: The factors which cause the average cost of producing something
to fall as output rises.

Bulk-buying (commercial) economies: Occur when businesses can gain discounts on
large orders from suppliers.

Technical Economies of scale: Reductions in average costs of production due to the use
of more advanced machinery.…

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Investment: Spending on equipment and plant that helps contribute to production.

Human capital investment: Spending on training and education, which allows workers to
be able to produce more output in the future.

Physical capital investment: Spending on new assets such as factories or machinery,
which allows a firm to produce…

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Corporate social responsibility: A measure of the impact that a business has on society
and the environment as a result of its operations.

Greenwash: Where a business tried to give the impression that it is environmentally
friendly when its claims may not be entirely true or justified.

Ethical responsibility: Where…

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Absolute poverty: Where a person cannot afford the basics of life such as food, shelter
and clothes.

Universal Benefits: Payments made by the government to people that are paid
regardless of a person's level of income.

Means-tested Benefits: Payments made by the government to people, that are
determined by the…

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Debt relief: The reduction or cancellation of debt that LEDCs owe to either the World
Bank or developed nations.

Charities: Organisations that aim to produce a surplus of income over expenses to
promote a good cause.

Non-Government Organisations: Independent non-profit organisations that aim to
achieve a particular objective, e.g. debt…


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